The Senate passed a sweeping financial reform bill today, though the only thing it is likely to sweep is more problems under the rug. After many compromises between Democrats and Republicans, the bill basically lets regulators feel the financial sector up but then caucusblocks them from going all the way. Sure there are now limits on how much banks can invest in hedge funds and sure some prop trading desks will be sold, but all this bill really did was create a fuckload more complexity in regulating the financial sector and The Street thrives on complexity since they make money by basically exploiting loopholes. So the bill gives the Fed more strength (and really, haven't they earned it?) to create a bunch of redundant regulatory groups and gives them power to do a bunch of shit that they will only do after the fact because pro-active regulation is more of an oxymoron than deafening silence or David Hasselhoff's talents. Money McBags gives the financial reform 3 yawns out of 4 as it's like thinking about putting a band aid on a gaping bullet wound.
In macro news, new claims for unemployment were the lowest they have been in 2 years, until the (No) Labor Department revises them upward next week. Claims dropped by 29k to 429k after they were once again manipulated upward from last week's 454k number to 458k. The large drop in claims is being attributed both to temporary layoffs at factories being postponed as companies like GM announced they will keep their plants open for most of the season, and just making up numbers. One reason the drop didn't move the market up is that the (No) Labor Department concentrates on seasonally adjusted numbers and their seasonal adjustment is likely as good as Sheyla Hershey's boob job so therefore if we look at unseasonallly adjusted numbers, we see that they rose by 45k to 513k, the highest number since January. Also, continuing claims jumped up by 247k to 4.68MM which is as healthy for the economy as smoking a cigarrette spiked with asbestos and Charlie Sheen's taint hair. Either way, Money McBags is sure that the 429k number will be revised upwards to something like 437k next week so it's hard to get excited about a big drop that is really due to a timing issue and will be changed anyway. And just to show that Money McBags is here for you in analyzing the numbers, remember that last week after claims were announced at 454k, Money McBags predicted that:
"The big macro news is that new claims for unemployment dropped to 454k or some number higher than that depending on how much the (No) Labor Department manipulates/readjusts numbers next week. Money McBags is not a betting man (unless there is money to be won or young ladies to impress) but he is willing to wager that next week we learn that new claims for this week should have actually been 459k."
And sure enough they were manipulated up to 458k so either Secretary of Labor Hilda Solis (though to be honest, Money McBags thought we did away with the word "secretary" and were now calling them "administrative assistants," but whatever) is using WGP to set her numbers or Money McBags' forecasting method which involves sticking his finger in the air while figuratively pulling a number out of Sofia Vergara's voluptuous ass is not just more delightful than the bullshit models used by the (No) Labor Department but also hella more accurate. See, anyone can make up numbers.
In other macro news, the NY Fed's Empire State Manufacturing index dropped like George Steinbrenner on Tuesday (too soon?). The index came in at 5.1, only slightly below the 18 economists had guessed, and while Money McBags has no idea what the difference between 5.1 and 18 is (other than 12.9), he's pretty sure something less than 1/3 of predictions isn't good in the same way that being the only female smurf or hiring MC Esher to design your staircase isn't good. Not only did manufacturing in New York decline, but it did in Philly as well where the Philly Fed's manufacturing index also fell to 5.1 which was below guesses of 10, though the 5 point miss was said to simply be stolen like everything else manufactured in Philly. While Money McBags finds it odd that two Fed manufacturing surveys would each register 5.1 in the same month (something about as likely as Paul Krugman winning a nobel prize), he does not find it surprising that manufacturing was starting to slip because we're in something called a GLOBAL FUCKING RECESSION.
On a slightly more positive note, the Fed said industrial production creeped up .1% in June thanks to mining and utilities, on an even more positive note, Brooklyn Decker. Finally, producer prices fell again, this time by .5%, led by a steep 2.2% decline in food prices which were driven by an earlier weather-related jump in the price of tomatoes and an even earlier economy related dive in people's incomes.
Internationally, China's growth slowed in the Q to 10.3% from 11.9% in last year's Q1 while industrial production rose 13.7% which would be great if it weren't lower than what 26 out of 27 analysts on Bloomberg had guessed. Of course on WGP, Money McBags has shown both that analysts have no ability to forecast numbers and the numbers themselves as mostly fictitious like supply side economics, big foot, and Lauren Conrad's career, so ho fucking hum again. While China's growth was basically inline, it left investors hungry for more just twenty minutes later and thus asian markets were down.
In the market, JP Morgan beat estimates in their quarterly game of numbers roulette. Net income was up 76% to $4.8B despite an 8% decline in revenue thanks to a $1.5B reserve release which was the biggest release in NY since Stephon Marbury. That said, while the reserve release is a bit puzzling since the economy is nudging south like a wannabe hollywood actress on her first casting couch, JPM's credit card division turned profitable for the first time in several quarters and overall the company beat guesses by ~$.03 after stripping out one-timers. The biggest surprise though was WGP favorite Dick "Don't call me Richard" Bove who never saw a financial stock he couldn't misunderstand or artificially pump up, lowered his rating of JPM claiming revenue was weak and earnings were more manipulated than new claims for unemployment numbers or Tiger Woods' image. In other large cap news, the market braces for GOOG's earnings release and Money McBags is long the stock but he bets it will drop 8% regardless of whether they beat or not because high frequency traders hate growing companies with solid earnings and instead have calibrated their algorithms to find companies that are correlated to the phases of the moon and since HFTs control 50% of the market volume, they win most of the time.
In small cap news, JOEZ is set to report tonight and they will likely show more revenue growth, and yet declining earnings as their cost of operations and tax rate have them more set to fail than Amy Winehouse in a "girls I'd like to bone contest." Also, Money McBags favorite KITD had their buy rating reitirated by Janney Capital today. Janney maintained their $13 price target which is only ~50% too low, but remember, analysts are paid to just publish and not to be right or stick their necks out for anything. As Money McBags isn't getting paid for his research and has no constituency to please other than his own trading account and the lovely Teresa Palmer, he is not afraid to make big calls and unless KITD's management is completely and utterly full of shit (10% chance but moving up proportionally with their growing A/R), this company is more undervalued than sharing a chilli dog with Natalie Portman.
Showing posts with label JPM. Show all posts
Showing posts with label JPM. Show all posts
Thursday, July 15, 2010
Tuesday, June 8, 2010
6/8/10 Midevening Report: Bernanke speech fails to significantly rally the market, says he'll overpromise more next time
The market was relatively quiet today as there was a lack of macro news though Fed Chairman Ben Bernanke was out late Monday saying: "My best guess is that we’ll have a continued recovery, but it won’t feel terrific like a blumpkin from Sara Varone followed by a nice wipe with that oh so soft aloe infused Cottonelle. Instead, it will feel more like having your nut hairs pulled out while listening to the smooth adult contemporary sounds of Sade". Ok, Money McBags made part of that up but that's not the point, the point is, Bernanke is hedging on this recovery like he just bought FAZ in his IRA. While he says the economy won't likely have a double dip recession, he did not say it wouldn't have a single dip recession followed by a falling off the cliff depression, so it's merely a matter of semantics. Bernanke also dusted off his Phillips curve (though it wasn't as curvy as Kimberly Phillips) and added that the central bank would raise rates before the economy returns to full employment, which should be any century now. That's great, but Money McBags would like to know what the full employment rate is? Is it 4%, 6%, or whatever proof the whiskey was that Milton Friedman was drinking when he came up with NAIRU (seriously Milt, you couldn't have come up with a catchier name than the Non-Accelerating Inflation Rate of Unemployment? Really? That name could put Ritalin out of business because just reading it has to make even the most hyperactive person drowsy.)? The point is, the full employment rate is a bogus hurdle as there is no set rate so saying rates will rise before we reach that level is as helpful as saying you'll stop running when you catch the horizon. With the stimulus funds coming to an end over the next few quarters and the economy already starting to show signs of coming down from its stimulus induced bender where it got drunk off of bail outs and hand outs and now finds itself waking up in a pool of its own spending while dry humping Greece's Aegean coast to the sweet whisperings of Benjamin S. Bernanke and and his magical money making machine, the economy is in a precarious position (though not as precarious of a position as Kirstie Alley's girdle).
Internationally, the new government in Hungary has announced a set of austerity measures aimed at solving their debt crisis. The austerity measures include cutting public wages, overhauling the tax system, banning mortgage lending in foreign currencies, and stopping free cookie day at the National Assembly. Also, the European Union's finance ministers met in Luxembourg with the most important outcomes being an agreement to allow tighter oversight on countries suspected of falsifying economic data and an agreement that Ginger Spice was the hottest of the Spice Girls.
In stock news, AAPL introduced a $199 iPhone which has a front facing camera that should now allow users to masturbate on chatroulette wherever they may be. The new iPhone is slimmer than the previous version, has better picture quality, and doesn't insist on cuddling when you are done with it. In other stock news, MCD had better than guessed at growth for the month of May of 4.8% worldwide thanks to the fact that they sell cheap shit and people can only afford to eat cheap shit. The company announced the falling Euro would impact yearly earnings but announced that to make up for those lost earning they are forming a partnership with American Heart Association to get a portion of the profits from all angiograms caused by eating their food. Finally, analysts were busy today with INTC downgraded by SIG to neutral because the analyst had to do something to try to drum up trading business for SIG and Dick Bove, who never saw a financial stock he didn't like and didn't understand, cut his price target at JP Morgan from jizztastic to just ballticklingly good.
In small cap stocks, Money McBags favorite KITD continues to get pounded like Alexis Texas on payday. With ~70% of their revenues coming from Europe, topline should be impacted by the 15%-20% drop in the Euro with investors seemingly betting on worse. Given that, it is difficult to come up with a short term valuation for KITD as the Euro appears to be falling off worse than proper grammar or Britney Spears' top. Last Q, the $/Euro exchange rate was somewhere around $1.38 and this Q, it's likely going to be around $1.25, and after that, who knows? So lets take a worse case scenario where we assume the exchange goes to parity. So that would be a 28% drop in the exchange rate from last Q. Money McBags thinks at the high end KITD can do $150MM of revenue next year, but let's call it $130MM because of the global uncertainty. The thing is, that number was derived off of the old $/EU exchange so if we knock 70% of their revenue (their EU exposed revenue) by 28%, revenue decreases by ~$25MM. So insted of $130MM, a worst case scenario yields revenue of $105MM and at 20% EBITDA margins, that is ~$21MM EBITDA. The company currently has a market cap of $210MM but they have somewhere around $30MM in cash after their last deal so they have an enterprise value of roughly $180MM and thus are currently at a worst case scenario of ~9x EV/EBITDA and topline growth in that scenario would still be ~20% (and dollar euro parity is almost as bad a scenario for the financial markets as having your daughter bring home Jordan Van Der Sloot for Thanksgiving Break). Of course all of this assumes that their costs and revenue are tied together so if the euro drops by 28% the associated costs with that will drop by 28% and thus margins will remain intact. The point is, Money McBags still likes this company longterm as they are in a rapidly growing space that is going to continue to grow for several years, but there are certainly short term currency issues. However, they are diversifying their revenues in to the US and Asia so as to become less dependent on Europe so while things look bad now, in the long run this company should be fine. With uncertainty comes opportunity and it is getting to the point where this company is just getting stupid cheap.
Internationally, the new government in Hungary has announced a set of austerity measures aimed at solving their debt crisis. The austerity measures include cutting public wages, overhauling the tax system, banning mortgage lending in foreign currencies, and stopping free cookie day at the National Assembly. Also, the European Union's finance ministers met in Luxembourg with the most important outcomes being an agreement to allow tighter oversight on countries suspected of falsifying economic data and an agreement that Ginger Spice was the hottest of the Spice Girls.
In stock news, AAPL introduced a $199 iPhone which has a front facing camera that should now allow users to masturbate on chatroulette wherever they may be. The new iPhone is slimmer than the previous version, has better picture quality, and doesn't insist on cuddling when you are done with it. In other stock news, MCD had better than guessed at growth for the month of May of 4.8% worldwide thanks to the fact that they sell cheap shit and people can only afford to eat cheap shit. The company announced the falling Euro would impact yearly earnings but announced that to make up for those lost earning they are forming a partnership with American Heart Association to get a portion of the profits from all angiograms caused by eating their food. Finally, analysts were busy today with INTC downgraded by SIG to neutral because the analyst had to do something to try to drum up trading business for SIG and Dick Bove, who never saw a financial stock he didn't like and didn't understand, cut his price target at JP Morgan from jizztastic to just ballticklingly good.
In small cap stocks, Money McBags favorite KITD continues to get pounded like Alexis Texas on payday. With ~70% of their revenues coming from Europe, topline should be impacted by the 15%-20% drop in the Euro with investors seemingly betting on worse. Given that, it is difficult to come up with a short term valuation for KITD as the Euro appears to be falling off worse than proper grammar or Britney Spears' top. Last Q, the $/Euro exchange rate was somewhere around $1.38 and this Q, it's likely going to be around $1.25, and after that, who knows? So lets take a worse case scenario where we assume the exchange goes to parity. So that would be a 28% drop in the exchange rate from last Q. Money McBags thinks at the high end KITD can do $150MM of revenue next year, but let's call it $130MM because of the global uncertainty. The thing is, that number was derived off of the old $/EU exchange so if we knock 70% of their revenue (their EU exposed revenue) by 28%, revenue decreases by ~$25MM. So insted of $130MM, a worst case scenario yields revenue of $105MM and at 20% EBITDA margins, that is ~$21MM EBITDA. The company currently has a market cap of $210MM but they have somewhere around $30MM in cash after their last deal so they have an enterprise value of roughly $180MM and thus are currently at a worst case scenario of ~9x EV/EBITDA and topline growth in that scenario would still be ~20% (and dollar euro parity is almost as bad a scenario for the financial markets as having your daughter bring home Jordan Van Der Sloot for Thanksgiving Break). Of course all of this assumes that their costs and revenue are tied together so if the euro drops by 28% the associated costs with that will drop by 28% and thus margins will remain intact. The point is, Money McBags still likes this company longterm as they are in a rapidly growing space that is going to continue to grow for several years, but there are certainly short term currency issues. However, they are diversifying their revenues in to the US and Asia so as to become less dependent on Europe so while things look bad now, in the long run this company should be fine. With uncertainty comes opportunity and it is getting to the point where this company is just getting stupid cheap.
Wednesday, April 14, 2010
4/14/10 Midafternoon Report: Market movin' on up, only a matter of time before it buys a dee-luxe apartment in the sky
Oh shit, it is on today like fucking Donkey Kong only this time Mario is not only going to save the Princess but he's going to get rich while doing so. The market is rallying like it's 1999 with positive earnings, positive macro data, and not a fucking peep out of those Greek assholes who keep trying to fuck things up by going bankrupt (You hear that Greece? Stay the fuck away from the market, put your hands on the car, and assume the position). On the day before tax day, the market is making investors forget about the dough they are handing over to Uncle Sam and instead focusing them on the dough they will have to hand over to Uncle Sam next year with all of their oh so sweet gains. Ahh, to be young and invested. The rally today was sparked by earnings from JPM and INTC who treated earnings like it was a cup and they were the two girls (and if you don't get that reference and have a very strong stomach and lenient internet rules, Money McBags begrudgingly recommends you google "two girls one cup," but don't say he didn't warn you). Along with positive earnings, macro data was so good Ben Bernanke was seen taking it out to lunch, playing a little footsie with it under the table, and then inviting it back to his hotel for a little regression analysis to make sure it was heteroskedastic.
US retail sales were up 1.6% in March over the previous month and up 7.4% from March of 2009 which beat economists' guesses. The beat was driven by car sales which were up 6.8% thanks to incentives such as tax breaks, low financing, and taint massages by Kelly Brook. Even with unemployment stuck at 9.7% like Keely Shaye Smith in a mudslide, consumers are spending because that is what they do. When the AIDS scare hit the porn scene in the 1980s, did that stop great films from being made? Maybe for a bit but now 20+ years later we're back to bareback ATM films with no worries by the performers about diseases. This is just like consumers coming back after the recession and levering up again because daddy needs his 60 inch tv. People have short memories (and Money McBags' short memories are mostly of He Ping Ping) and are generally optimistic so good news spurs them to repeat behaviors that may not be optimal for them in the long run. In other macro news, the CPI was up only.1% and was flat excluding food and energy (or you know, the things you actually need). The lack of an increase in CPI bodes well for the Federal Reserves' plan to keep interest rates low for an "extended period" as inflation looks like it will be pushed out for another few quarters until investors can actually finish counting all of the cash the US government printed (you all remember Money McBags' "Too big to count" hypothesis). The one small turd in the punchbowl today was that mortgage applications fell for the second straight week as people seem content to live in their current abodes and the game of flipping houses has finally passed like a painful kidney stone, Mickey Roarke's comeback, or one piece bathing suits.
On top of the good macro news, Bernanke was getting his Fed on today in front of Congress by saying that he doesn't plan to change any policy decisions but the recovery may be moderate due to high and prolonged unemployment, low construction demand, the poor fiscal condition of state and local governments, and Rasheed Wallace. Bernanke was quoted as saying about borrowing that "The decline in large part reflects sluggish loan demand and the fact that many potential borrowers no longer qualify for credit, both results of a weak economy." Luckily, banks have shorter memories than investors and it is only a matter of months before FICO 560 people are once again getting $500k loans to buy houses in states they don't work at variable interest rates. But hey, until then, rally on!!!!!!!
In stock news, JP Morgan beat estimates, grew income by 55%, and raised their outlook for the year. So fuck you right in the ear recession, you hear that (though maybe you won't hear it with a dick in your ear)? JPM earned $.74 per share which was $.10 above analyst guesses and revenue was $28.2B, ~$2B above guesses of $26.5B. While JPM's retail bank and customer card businesses are still struggling a bit, the investment bank blew it out thanks to strong fixed income trading. And if a weak retail business and strong fixed income trading don't bode well for the economy, then Money McBags didn't learn anything over these past few years. Oh wait, trading profits and a fuckshit consumer are exactly what got us in to this situation, ugh. But I guess there is something to say about the classics. CEO Jamie Dimon did say that “We continued to see delinquencies stabilize, and in some cases improve, in our credit portfolios,” which is a good sign, but then he added "and if they don't stabilize, we'll just create some complex products to trade with other banks and further boost our illusory profits." While Chase card may have struggled, at least the bad loans have been siphoned off into a holding company to separate the risk and to hopefully make investors forget about what happened and just concentrate on Chase's growth portfolio which won't need to be put in to it's own holding tank, until it does. In other stock news INTC crushed their quarter with eps coming in at $.43 which was well above last year's $.11 eps and revenue was up $3B to $10B. They also announced strong revenue guidance, an improving gross margin, and they will be hiring 1k to 2k people which will be their first new hires in 5 years, so take that unemployment rate. INTC's Q was so good that Money McBags may have to take it in to the bathroom and have a little time for himself with it while thinking about INTC's motherboards which are so sexy they can be considered MBILFs. Finally Apple announced that they are going to delay the iPad launch outside of the US because demand in the US has been stronger than the demand for accutane in Jessica Simpson's house or the female condom in Britney Spears' house.
In small cap news, AAPL's strong demand for the iPad could bode well for CRUS if CRUS actually has a chip in the iPad like they do the iPhone. The stock is reacting well today to the INTC blow out quarter and potentially the iPad news. Money McBags thinks they can earn $.73 next year but assumes only 12% topline growth so if their energy business can continue to come back and if their audio business just slows down a little from their current 80% growth rate, that number should be surpassed easier than a 3rd grader surpasses Kim Kardashian's reading level. The stock is now near $10, and remember Money McBags has been talking about CRUS since 1/12/10 when it was trading just under $8 and he mentioned he bought some on 1/29/10 when it had fallen below $7, so a >40% gain in 2+ months isn't too bad. Money McBags hopes you all joined him on this ride and have been able to take your lady friends (or man friends) out to many lobster tail and bj dinners. That said, they have $2 in cash so they are really trading at ~10x Money McBags admittedly cautious estimate for this year which is pretty fucking cheap for a company that sells a chip to the biggest fucking electronics seller/fad in the Universe. Also, JOEZ is rallying today after the huge sell off from their earnings. Money McBags is still on the sidelines here for reasons he has laid out over the past few days. Basically, if you're in the market today you can't lose, like flipping a two headed coin, having your brother be the Governor of the state you need to win in a contested election, or being Alexis Texas in a great ass contest. One stock that is down which Money McBags is going to start looking in to again is CKSW which produces the best logistics/scheduling software for fleets. The company announced a 15MM share shelf offering today which is really fucking odd since they only have 30MM shares outstanding so this would be hella dilutive if they actually went through with the full offering. Money McBags is going to look more in to this over the next few days as the company apparently has the best software, but a shelf like that is more perplexing than Jennifer Love Hewitt's career or an Amish computer camp.
US retail sales were up 1.6% in March over the previous month and up 7.4% from March of 2009 which beat economists' guesses. The beat was driven by car sales which were up 6.8% thanks to incentives such as tax breaks, low financing, and taint massages by Kelly Brook. Even with unemployment stuck at 9.7% like Keely Shaye Smith in a mudslide, consumers are spending because that is what they do. When the AIDS scare hit the porn scene in the 1980s, did that stop great films from being made? Maybe for a bit but now 20+ years later we're back to bareback ATM films with no worries by the performers about diseases. This is just like consumers coming back after the recession and levering up again because daddy needs his 60 inch tv. People have short memories (and Money McBags' short memories are mostly of He Ping Ping) and are generally optimistic so good news spurs them to repeat behaviors that may not be optimal for them in the long run. In other macro news, the CPI was up only.1% and was flat excluding food and energy (or you know, the things you actually need). The lack of an increase in CPI bodes well for the Federal Reserves' plan to keep interest rates low for an "extended period" as inflation looks like it will be pushed out for another few quarters until investors can actually finish counting all of the cash the US government printed (you all remember Money McBags' "Too big to count" hypothesis). The one small turd in the punchbowl today was that mortgage applications fell for the second straight week as people seem content to live in their current abodes and the game of flipping houses has finally passed like a painful kidney stone, Mickey Roarke's comeback, or one piece bathing suits.
On top of the good macro news, Bernanke was getting his Fed on today in front of Congress by saying that he doesn't plan to change any policy decisions but the recovery may be moderate due to high and prolonged unemployment, low construction demand, the poor fiscal condition of state and local governments, and Rasheed Wallace. Bernanke was quoted as saying about borrowing that "The decline in large part reflects sluggish loan demand and the fact that many potential borrowers no longer qualify for credit, both results of a weak economy." Luckily, banks have shorter memories than investors and it is only a matter of months before FICO 560 people are once again getting $500k loans to buy houses in states they don't work at variable interest rates. But hey, until then, rally on!!!!!!!
In stock news, JP Morgan beat estimates, grew income by 55%, and raised their outlook for the year. So fuck you right in the ear recession, you hear that (though maybe you won't hear it with a dick in your ear)? JPM earned $.74 per share which was $.10 above analyst guesses and revenue was $28.2B, ~$2B above guesses of $26.5B. While JPM's retail bank and customer card businesses are still struggling a bit, the investment bank blew it out thanks to strong fixed income trading. And if a weak retail business and strong fixed income trading don't bode well for the economy, then Money McBags didn't learn anything over these past few years. Oh wait, trading profits and a fuckshit consumer are exactly what got us in to this situation, ugh. But I guess there is something to say about the classics. CEO Jamie Dimon did say that “We continued to see delinquencies stabilize, and in some cases improve, in our credit portfolios,” which is a good sign, but then he added "and if they don't stabilize, we'll just create some complex products to trade with other banks and further boost our illusory profits." While Chase card may have struggled, at least the bad loans have been siphoned off into a holding company to separate the risk and to hopefully make investors forget about what happened and just concentrate on Chase's growth portfolio which won't need to be put in to it's own holding tank, until it does. In other stock news INTC crushed their quarter with eps coming in at $.43 which was well above last year's $.11 eps and revenue was up $3B to $10B. They also announced strong revenue guidance, an improving gross margin, and they will be hiring 1k to 2k people which will be their first new hires in 5 years, so take that unemployment rate. INTC's Q was so good that Money McBags may have to take it in to the bathroom and have a little time for himself with it while thinking about INTC's motherboards which are so sexy they can be considered MBILFs. Finally Apple announced that they are going to delay the iPad launch outside of the US because demand in the US has been stronger than the demand for accutane in Jessica Simpson's house or the female condom in Britney Spears' house.
In small cap news, AAPL's strong demand for the iPad could bode well for CRUS if CRUS actually has a chip in the iPad like they do the iPhone. The stock is reacting well today to the INTC blow out quarter and potentially the iPad news. Money McBags thinks they can earn $.73 next year but assumes only 12% topline growth so if their energy business can continue to come back and if their audio business just slows down a little from their current 80% growth rate, that number should be surpassed easier than a 3rd grader surpasses Kim Kardashian's reading level. The stock is now near $10, and remember Money McBags has been talking about CRUS since 1/12/10 when it was trading just under $8 and he mentioned he bought some on 1/29/10 when it had fallen below $7, so a >40% gain in 2+ months isn't too bad. Money McBags hopes you all joined him on this ride and have been able to take your lady friends (or man friends) out to many lobster tail and bj dinners. That said, they have $2 in cash so they are really trading at ~10x Money McBags admittedly cautious estimate for this year which is pretty fucking cheap for a company that sells a chip to the biggest fucking electronics seller/fad in the Universe. Also, JOEZ is rallying today after the huge sell off from their earnings. Money McBags is still on the sidelines here for reasons he has laid out over the past few days. Basically, if you're in the market today you can't lose, like flipping a two headed coin, having your brother be the Governor of the state you need to win in a contested election, or being Alexis Texas in a great ass contest. One stock that is down which Money McBags is going to start looking in to again is CKSW which produces the best logistics/scheduling software for fleets. The company announced a 15MM share shelf offering today which is really fucking odd since they only have 30MM shares outstanding so this would be hella dilutive if they actually went through with the full offering. Money McBags is going to look more in to this over the next few days as the company apparently has the best software, but a shelf like that is more perplexing than Jennifer Love Hewitt's career or an Amish computer camp.
Friday, January 15, 2010
1/15/10 Midday Report: JPM sends the market down on estimate beat, promises to do worse next time
It is a bizarre day on the market today as INTC crushed numbers and is down, JP Morgan turned a huge profit, yet disappointed, and the dollar actually gained last night as apparently Amanda Drury was at the New York Rick's Cabaret and only accepted the local currency (ok, the last one may not have been true, but Money McBags would certainly contribute his market insights to Ms. Drury's Squawk Box anytime). Before we get to earnings today, there were a flurry of macroeconomic reports this morning. Inflation was flatter that Lindsay Lohan's derrierre as the consumer price index rose only .1% and the Michigan Consumer Sentiment index rose only slightly from "holy fuck" to "we're just kind of screwed." These data points continue to signal that the lack of job creation and lingering 10% unemployment are likely to temper the economic recovery like ALS tempered Stephen Hawkings' dreams of becoming a dancer. With inflation proving to be tamer than a Jay Leno monologue, the fed is poised to keep rates low for the near and immediate future. This should be continued good news for the banking industry (and again, the only business plan better than lending free money for more than free is the US Mint, mmmmmmm mint) despite JP Morgan's topline miss today. Given that yields are still juicy and rates unlikely to go up, smart investors may want to dabble in NLY and their 16%ish dividend yield as those guys just know how to make money (of course, investing in a company that relies on repo funding makes Money McBags more skittish than a paraskevidekatriaphobic at an all day Jason Vorhees marathon on Friday the 13th, so buyer beware).
As for stock news today, INTC blew away their quarter like they were auditioning for an upcoming role in a bukakke kings film. Expectations were for $.30 eps and they dropped $.40 eps on analysts' excel models while hitting record gross margins and guided to above Street revenue. The fact that they are trading off today is nuttier than a cock sandwich with extra balls as analysts question whether things can get any better. INTC is suffering from Wall Street's buy the rumor, sell the news mentality which doesn't make sense to Money McBags. It's like boning Brooklyn Decker and then complaining that you'll never do better. Hey assholes, you're still boning Brooklyn Decker so quit your whining and ride out INTC. Just because she's 22 doesn't mean she's peaked and just because INTC had record gross margins doesn't mean Moore's Law won't still propel them to better quarters. I mean INTC had a record gross margin despite the record sales of their lower end Atom chip. There is still room to grow here.
The bigger news on the market today is that JP Morgan's profitlicious quarter disappointed The Street as revenue was a little light (though not as light as a bulimic with a supercharged gag reflex), the retail bank put up a loss, and while EPS beat estimates, the beat was seen as lower quality than a Rollex watch or a Louis Vuittone bag as it was driven by tax benefits, lower comp, and the end of lobster Wednesdays. The low quality beat has sent the market down as investors now worry about other, less well-managed big banks (Citi, cough, Citi) and their retail exposures.
In small cap news today, COOL not only shit the proverbial bed, but they then remade the bed and shit in it all over again before tucking themselves in for the night. Analysts expected $.11 of eps and COOL was able to deliver a not so cool $.16 eps loss. For those of you not familiar with the company, they license and buy the rights to cheap crappy games for the Wii and DS aimed at families and girls in what is called the "casual gaming" segment ("casual" of course being an interesting epithet for "non"). Anyway, in a neat trick (though not as neat as the hidden button illusion) COOL has seen revenues increase but bottom line decrease as they believe profitability is just a suggestion. After diluting shareholders last Q by raising $9MM in cash, COOL further ingratiating themselves to their owners by accruing a $.10 impairment loss because nobody actually wanted their crappy games, a $.05 charge because their Our House franchise was apparently foreclosed upon, and another $.07 eps drop from lower margins due to something called "poor sales". Their gross margin dipped from 28% to 3% and they guided to 2010 non-gaap eps of $.05, so even though they are down 22% today, they are still trading at 20ish times 2010 eps and that number is less believable than Larry Craig having a wide stance. This company continues to grow revenue and become less profitable every quarter (and for their next trick they will lose weight and become more unattractive) and should probably trade at no more than $.50 or 10x their unlikely 2010 eps. If you were short them, congratulations. Money McBags was on the sidelines for this one, but thought the company was potentially cheap if management could show progress, which of course they didn't.
Enjoy the long weekend, Money McBags will be back when the market reopens on Tuesday.
As for stock news today, INTC blew away their quarter like they were auditioning for an upcoming role in a bukakke kings film. Expectations were for $.30 eps and they dropped $.40 eps on analysts' excel models while hitting record gross margins and guided to above Street revenue. The fact that they are trading off today is nuttier than a cock sandwich with extra balls as analysts question whether things can get any better. INTC is suffering from Wall Street's buy the rumor, sell the news mentality which doesn't make sense to Money McBags. It's like boning Brooklyn Decker and then complaining that you'll never do better. Hey assholes, you're still boning Brooklyn Decker so quit your whining and ride out INTC. Just because she's 22 doesn't mean she's peaked and just because INTC had record gross margins doesn't mean Moore's Law won't still propel them to better quarters. I mean INTC had a record gross margin despite the record sales of their lower end Atom chip. There is still room to grow here.
The bigger news on the market today is that JP Morgan's profitlicious quarter disappointed The Street as revenue was a little light (though not as light as a bulimic with a supercharged gag reflex), the retail bank put up a loss, and while EPS beat estimates, the beat was seen as lower quality than a Rollex watch or a Louis Vuittone bag as it was driven by tax benefits, lower comp, and the end of lobster Wednesdays. The low quality beat has sent the market down as investors now worry about other, less well-managed big banks (Citi, cough, Citi) and their retail exposures.
In small cap news today, COOL not only shit the proverbial bed, but they then remade the bed and shit in it all over again before tucking themselves in for the night. Analysts expected $.11 of eps and COOL was able to deliver a not so cool $.16 eps loss. For those of you not familiar with the company, they license and buy the rights to cheap crappy games for the Wii and DS aimed at families and girls in what is called the "casual gaming" segment ("casual" of course being an interesting epithet for "non"). Anyway, in a neat trick (though not as neat as the hidden button illusion) COOL has seen revenues increase but bottom line decrease as they believe profitability is just a suggestion. After diluting shareholders last Q by raising $9MM in cash, COOL further ingratiating themselves to their owners by accruing a $.10 impairment loss because nobody actually wanted their crappy games, a $.05 charge because their Our House franchise was apparently foreclosed upon, and another $.07 eps drop from lower margins due to something called "poor sales". Their gross margin dipped from 28% to 3% and they guided to 2010 non-gaap eps of $.05, so even though they are down 22% today, they are still trading at 20ish times 2010 eps and that number is less believable than Larry Craig having a wide stance. This company continues to grow revenue and become less profitable every quarter (and for their next trick they will lose weight and become more unattractive) and should probably trade at no more than $.50 or 10x their unlikely 2010 eps. If you were short them, congratulations. Money McBags was on the sidelines for this one, but thought the company was potentially cheap if management could show progress, which of course they didn't.
Enjoy the long weekend, Money McBags will be back when the market reopens on Tuesday.
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